Want to reduce the amount of interest you're paying? Consider a balance transfer

What is a balance transfer?

A balance transfer is the process of transferring high-interest home loan from your existing bank to another bank for a lower interest rate. This tactic will result in reduction of EMIs, revision in loan tenure and allow you to pay off your home loan faster.

How does the process work?

Firstly, you need to secure a pre-approval from the new bank offering lower interest rates. You will need to submit a letter to the existing bank requesting a loan transfer. Based on your request, the bank will give a consent letter/NOC, a statement mentioning the outstanding amount and list of documents for the mortgaged property. This needs to be provided to the new bank, who then disburses your loan amount to the old bank for an account closure. Once the transaction is over, your property documents will be handed over to the new bank, the remaining post-dated cheques/ECS will be cancelled.

You may also need to pay a processing fee to the new bank as well as applicable standard Govt. fees and charges.

Another important aspect is the timing of your loan switch. If you are planning to switch your loan after most of your interest has been repaid, it's not advisable to do so.

Factor in all these costs when comparing the total loan cost between the two offers. If you feel there is a significant amount of interest to be saved from the move, then you can make a profitable switch.

Remember that for a home loan switch you need go through all the procedures involved afresh. These include a credit appraisal, legal verification of property documents and technical evaluation with the new bank, etc. 

The Home Loan market is dynamic, with new innovations in home loan products and revised Interest rates on a regular basis. Make sure you stay up-to-date.

Have a home loan check with our Home advisors and make sure you've the lowest rates.